HOW MUCH IS YOUR TRACKER MORTGAGE WORTH TO YOUR LENDER?
Posted by DLS Capital Management on May 23 2011 @ 14:59
The average tracker rate is 2.3 per cent yet it is costing on average 5.2 per cent for your lender to borrow money on the open market. Permanent tsb recently launched its 10 per cent bonus offer to borrowers who pay lump sums of at least €5’000 off their tracker mortgage and other lenders are expected to follow suit.
The Sunday Independent Newspaper recently asked the Independent Mortgage Advisers Federation (IMAF) and Advisors.ie for their opinion.
The IMAF suggests you should only take up the Permanent tsb offer if you have already decided to sell your house, or if you have less than 4 years outstanding on your mortgage.
Advisors.ie suggests that you would need some other sweetener from your lender, on top of a payoff, in return for giving up a tracker rate. Unlike tracker mortgages where the interest rate only increases if the ECB rate increases, your lender can increase the interest rate on standard variable mortgages whenever they choose to.
Any decision to give up your tracker should not be taken lightly.